Why Your Branded Widget Might Not Be Welcome on MySpace

Social Net's Dispute With Photobucket Shows How It's Leaning Toward a More Controlled Philosophy

NEW YORK (AdAge.com) -- The talk around MySpace and Photobucket highlights one of the great divides in the philosophy and business models of social networks: to be open or closed.
PhotoBucket: MySpace blocked the company's slideshows; now the two are close to a merger.
Consider: The two companies were publicly feuding in early April when MySpace blocked Photobucket's ad-supported slideshows from the site. After two weeks, the issue was suddenly resolved as they promised to communicate better. And now it's a foregone conclusion around the web that Photobucket will soon be part of the MySpace family (although neither company has commented on it).

Mutual benefits
Buying Photobucket would give MySpace what it has been unable to build on its own: the most popular photo site on the web. Plus, the two share many of the same visitors: The combined unique audience is 57.7 million.

But the moves have raised all sorts of questions about the viability of companies building businesses on the backs of social networks; whether the new mantra is "buy or block," as a Wired blogger put it; and where users fit into the decision about what goes on their pages.

It also forces the issue for marketers who are increasingly counting on consumers to distribute their advertising through social networks and blogs. Must advertisers not only get consumers to want to co-opt branded content and tools for their profile pages but also get the permission of the social network?

"That's the interesting battle that's waging," said Greg Verdino, VP-director of emerging channels at Digitas, which recently created a widget for Cingular that's been distributed and embedded around the web. Historically, MySpace has been an open environment, one in which users were responsible for designing and crafting their own profile pages, and an entire cottage industry cropped up around that environment.
Greg Verdino, VP-director of emerging channels at Digitas
Flexibility
But as companies like YouTube and Photobucket gained page views and began making money off those services, MySpace started encouraging users to use its own video and photo tools. (At one time MySpace infamously tried to block YouTube videos.) And of course, that's the business problem of social media: For many marketers, its greatest value lies in the free media created.

"MySpace has to monetize their site, so [blocking ad-supported services] is well within their rights," Mr. Verdino said. "But by the very nature of social media, whether it's MySpace or the blogosphere, it's all about consumers communicating with other consumers, and it requires you provide consumers with as much flexibility as you can so they can express themselves to their desires." Marketers also want flexibility, which is why companies such as Konfabulator (now owned by Yahoo), Widgetbox, Clearspring and FreeWebs have popped up.

Making sacrifices
Chris Cunningham, VP-ad sales for FreeWebs, which makes widgets -- including the one for Mr. Verdino's client, Cingular -- and lets users build their own profiles on the web, recalls a recent situation in which he was building a widget for a client and took the "powered by FreeWebs" tag off the widget in order to appease a large social network. "We care more about this thing being pushed out and being viral," he said, noting that pushing FreeWebs was secondary. "We want it to go to any social network -- Bebo, Xanga, Facebook."

According to MySpace's terms of use, the site forbids unauthorized commercial content, including things like sponsored widgets. But in deciding what to limit, it also has to consider the impact on users. In other -- rather cliched -- words, social networks are still a place where power to the people is the modus operandi.

"Somebody's profile is at the crux of who and what they are," said Rachel Konig, chief operating officer of Digital Power & Light. Forbidding users from adding a popular widget to their pages is like "ripping tattoos off of every kid in Miami."